Wednesday, May 24, 2017

Fyre Festival and Missing Management

If you were to pick a management case study from this month’s news, it would be the Fyre Festival. The management maxim, “Keep your eyes on the prize,” applies to the planned music festival in the Bahamas that collapsed hours before it was supposed to have started. With any kind of festival, the measure of success is whether the people who attend have an experience they can enjoy. Set against that standard, a festival has to fail spectacularly to be remembered as a humanitarian crisis.

Those who arrived early, though, described essentially that. It was a chaotic scene of neglect. Attendees were, for the most part, left to fend for themselves. There was no food beyond what people had carried in with them. The tents they had paid to stay in did not exist. There was so little there, it was hard to be sure they had arrived in the right place, even though they had. The night before the music schedule was supposed to have started, there were hungry people trying to sleep in the rain or walking back to the airport in the dark. Bad as it was, the scene could have been much worse except that some of the promised transportation links also were not working, so that thousands of music fans trying to reach the festival were stranded in Florida.

Though there was reason to worry, within two days we got the report that everyone got out safely. But “no one died” is hardly a recommendation, and the festival is ruined as a brand and almost surely in financial terms as well. It is hard to think of a state of business failure more resounding than the current state of Fyre Festival:

It is barred from holding any future event anywhere in the country.

Managers have fled the country and gone into hiding. The business cannot be reached by phone, email, mail, or any other means.

Suppliers and employees are owed millions of dollars.

It faces an estimated $100 million in liabilities, with six U.S. lawsuits filed already.

The Department of Labor is investigating not just the business itself, but its contacts in the government.

In the U.S., where the festival was most heavily promoted, the FBI is conducting a wire fraud investigation.

Fyre Festival did some things right, particularly in its late notes to performers and participants on the way to the event, apologizing and advising them to stand by. But a few days later, it inexplicably made its situation worse by saying the event would be rescheduled. By that time it was already clear from a distance that a relaunch would be impossible to do.

Bringing thousands of people to a place without food is a risky thing to do, but a festival without food is more than dangerous, it is a contradiction. If it is true that the festival was selling tickets without making any provision for food, the FBI will have a case for fraud. But it could also be that there were plans for food and accommodations and that it was several of the festival’s suppliers, not the festival itself, who took the money and ran. This speculation doesn’t shed much light on the situation as it unfolded, though more facts will come out and it is possible a coherent narrative will come together eventually. What seems clear, though, is that there was simply not enough management paying attention to the essential components of the customer experience. In any customer-facing business operation, if customers arrive and report that no one is in charge, it is a sign of a fundamental failure.

Missing management is a failing that nearly half of all businesses on this scale are guilty of. I can easily think of several examples of businesses that I saw fail locally in this way. They never became a humanitarian crisis because they never faced a launch on the same scale as a music festival, but the slower time scale makes their failures all the more inexplicable. How hard is it to go stand where the customer stands and look around? In an era when venture capitalists can spin up a business idea and try it out on a large scale without ever being prompted to stop and think it through, I am afraid this kind of management failure will become more common, not less. The old Roman phrase “buyer beware” might have to be revised to say “customer beware,” as we are obliged to be responsible for our own personal safety when trying to do business with businesses like these.